Question 1

Figure 16-7  
-Refer to Figure 16-7. Suppose a firm is operating in the situation depicted in panel

Accepted Answer

A)  The firm is earning a positive short-run profit. 
B)  Which of the following statements is correct? 
C)  The firm is earning a negative short-run profit. 
D)  The firm is earning zero short-run profit. 
D)  We cannot determine profit because we do not know the firm's average total cost. 
A)  The firm is earning a positive short-run profit. 
B)  Which of the following statements is correct? 
C)  The firm is earning a negative short-run profit. 
D)  The firm is earning zero short-run profit. 
D)  We cannot determine profit because we do not know the firm's average total cost.

Question 2

Brand names are rarely used to convey information about product quality.

Accepted Answer

A) True 
 B)False

Question 3

If firms in a particular market sell similar or identical products, then the market is (i) perfectly competitive.
(ii) monopolistically competitive.
(iii) an oligopoly.

Accepted Answer

A)  (i) or (ii) only 
B)  (ii) or (iii) only 
C)  (i) or (iii) only 
D)  (i) only 
A)  (i) or (ii) only 
B)  (ii) or (iii) only 
C)  (i) or (iii) only 
D)  (i) only

Question 4

Which type of market structure has the fewest number of firms?

Accepted Answer

The answer of Which type of market structure has the...

Question 5

Entry of new firms in monopolistically competitive industries can convey a negative externality on producers because firms lose customers and profits from the entry of new competitors. This externality is called the

Accepted Answer

business-s

Question 6

A monopolistically competitive industry is characterized by

Accepted Answer

A)  many firms, differentiated products, and barriers to entry. 
B)  many firms, differentiated products, and free entry. 
C)  a few firms, identical products, and free entry. 
D)  a few firms, differentiated products, and barriers to entry. 
A)  many firms, differentiated products, and barriers to entry. 
B)  many firms, differentiated products, and free entry. 
C)  a few firms, identical products, and free entry. 
D)  a few firms, differentiated products, and barriers to entry.

Question 7

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
  
-Refer to Table 16-1. What is the concentration ratio in Industry B?

Accepted Answer

A)  18% 
B)  34% 
C)  61% 
D)  95% 
A)  18% 
B)  34% 
C)  61% 
D)  95%

Question 8

Which of the following pairs illustrates the two extreme examples of market structures?

Accepted Answer

A)  competition and oligopoly 
B)  competition and monopoly 
C)  monopoly and monopolistic competition 
D)  oligopoly and monopolistic competition 
A)  competition and oligopoly 
B)  competition and monopoly 
C)  monopoly and monopolistic competition 
D)  oligopoly and monopolistic competition

Question 9

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
  
-Refer to Table 16-2. Which industry has the highest concentration ratio?

Accepted Answer

A)  Industry J 
B)  Industry K 
C)  Industry L 
D)  Industry M 
A)  Industry J 
B)  Industry K 
C)  Industry L 
D)  Industry M

Question 10

Which of these types of firms can earn a positive economic profit in the long run?

Accepted Answer

A)  monopolies, but not competitive firms or monopolistically competitive firms 
B)  monopolies and monopolistically competitive firms, but not competitive firms 
C)  monopolies, monopolistically competitive firms, and competitive firms 
D)  No firms earn positive economic profit in the long run. Entry will reduce all firms' economic profit to zero in the long run. 
A)  monopolies, but not competitive firms or monopolistically competitive firms 
B)  monopolies and monopolistically competitive firms, but not competitive firms 
C)  monopolies, monopolistically competitive firms, and competitive firms 
D)  No firms earn positive economic profit in the long run. Entry will reduce all firms' economic profit to zero in the long run.

Question 11

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

Accepted Answer

A)  oligopoly or perfectly competitive market. 
B)  oligopoly or monopoly market. 
C)  oligopoly or monopolistically competitive market. 
D)  monopoly or monopolistically competitive market. 
A)  oligopoly or perfectly competitive market. 
B)  oligopoly or monopoly market. 
C)  oligopoly or monopolistically competitive market. 
D)  monopoly or monopolistically competitive market.

Question 12

Scenario 16-3
Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.)
  
-Refer to Scenario 16-3. How many double scoop ice cream cones should Peter sell per day to maximize his profit?

Accepted Answer

A)  80 
B)  100 
C)  120 
D)  140 
A)  80 
B)  100 
C)  120 
D)  140

Question 13

Consider two industries in which firms hold the following market shares:
Industry A: 25%, 20%, 18%, 15%, 8%, 7%, 4%, 2%, 1%
Industry B: 30%, 10%, 9%, 8%, 8%, 8%, 8%, 6%, 6%, 5%, 2%
What are the concentration ratios for each industry? Which is more competitive?

Accepted Answer

The answer of Consider two industries in which firms hold...

Question 14

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures can have positive profits in the short run?

Accepted Answer

perfect competition

Question 15

A recent outbreak of hepatitis was linked to a national fast-food restaurant chain. This is an example of a case in which

Accepted Answer

A)  brand name identity increases the effectiveness of markets. 
B)  brand name identity can be detrimental to the profitability of a firm. 
C)  advertising is ineffective in salvaging perceptions of product quality. 
D)  advertising cannot be used to establish brand loyalty. 
A)  brand name identity increases the effectiveness of markets. 
B)  brand name identity can be detrimental to the profitability of a firm. 
C)  advertising is ineffective in salvaging perceptions of product quality. 
D)  advertising cannot be used to establish brand loyalty.

Question 16

In the long run, a monopolistically competitive firm produces a quantity that is

Accepted Answer

A)  equal to the efficient scale. 
B)  less than the efficient scale. 
C)  greater than the efficient scale. 
D)  consistent with diseconomies of scale. 
A)  equal to the efficient scale. 
B)  less than the efficient scale. 
C)  greater than the efficient scale. 
D)  consistent with diseconomies of scale.

Question 17

The term excess capacity refers to the fact that a firm operates on the upward-sloping portion of its average-total- cost curve.

Accepted Answer

A) True 
 B)False

Question 18

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
  
-Refer to Table 16-2. What is the concentration ratio for Industry K?

Accepted Answer

A)  about 8% 
B)  about 36% 
C)  about 48% 
D)  about 84% 
A)  about 8% 
B)  about 36% 
C)  about 48% 
D)  about 84%

Question 19

Figure 16-12  
-Refer to Figure 16-12. How much cost per unit could this firm save by producing the efficient level of output rather than the profit-maximizing level of output?

Accepted Answer

A)  $0 
B)  $1 
C)  $2 
D)  $3 
A)  $0 
B)  $1 
C)  $2 
D)  $3

Question 20

Figure 16-2. The figure is drawn for a monopolistically competitive firm.  
-Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

Accepted Answer

A)  Firms will exit this industry. 
B)  Firms will enter this industry. 
C)  This firm will continue to earn positive economic profits. 
D)  This firm will incur losses. 
A)  Firms will exit this industry. 
B)  Firms will enter this industry. 
C)  This firm will continue to earn positive economic profits. 
D)  This firm will incur losses.

Exam 16: Monopolistic Competition

Figure 16-7 -Refer to Figure 16-7. Suppose a firm is operating in the situation depicted in panel

Brand names are rarely used to convey information about product quality.

If firms in a particular market sell similar or identical products, then the market is (i) perfectly competitive. (ii) monopolistically competitive. (iii) an oligopoly.

Which type of market structure has the fewest number of firms?

Entry of new firms in monopolistically competitive industries can convey a negative externality on producers because firms lose customers and profits from the entry of new competitors. This externality is called the

A monopolistically competitive industry is characterized by

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry B?

Which of the following pairs illustrates the two extreme examples of market structures?

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. Which industry has the highest concentration ratio?

Which of these types of firms can earn a positive economic profit in the long run?

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

Consider two industries in which firms hold the following market shares: Industry A: 25%, 20%, 18%, 15%, 8%, 7%, 4%, 2%, 1% Industry B: 30%, 10%, 9%, 8%, 8%, 8%, 8%, 6%, 6%, 5%, 2% What are the concentration ratios for each industry? Which is more competitive?

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures can have positive profits in the short run?

A recent outbreak of hepatitis was linked to a national fast-food restaurant chain. This is an example of a case in which

In the long run, a monopolistically competitive firm produces a quantity that is

The term excess capacity refers to the fact that a firm operates on the upward-sloping portion of its average-total- cost curve.

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. What is the concentration ratio for Industry K?

Figure 16-12 -Refer to Figure 16-12. How much cost per unit could this firm save by producing the efficient level of output rather than the profit-maximizing level of output?

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters